perriam & partners ltd 2012 newsletter.pdf · the year end - 31 march 2012 there is a good...

Perriam & Partners Ltd

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BEHIND THE NUMB3RS—2012

March 2012 —Issue 42

Purpose With Profit

Contents in this newsletter:

1. Beans on Broads

Career Corner - what’s hot

The year end - 31 March 2012

3. Lets Talk Tax

Member Tax Credits

Annual Tax Rates

www.perriams.co.nz

2. Top Five Regrets of Dying

What are you going to do to attract new business

The Office Room Romp

Stop go signs

Family Support Entitlements - 2012

4. Tax Schemes and Aggressive Tax Planning

Achievers Club

The Cellphone-Can’t you just turn it off for a little bit!?

Ministry Reveals $180 Million account error

All information in this newsletter is, to the best of the author’s knowledge, true and accurate. No liability is assumed by the author

or the publisher for any losses suffered by any person relying directly or indirectly upon this newsletter.

You are advised to consult professionals before acting upon this information.

When customers are unhappy, an apology can put things right. So why won’t more businesses say the magic word? - as Stevie Wonder wrote “I just called to say I’m sorry”

Studies say that owning a pet can reduce your stress and

bestow health benefits. What’s more pets don't grumble,

they stay loyal and show how to celebrate and enjoy the

little things.

Rental rip-offs by Christchurch landlords need addressing urgently.

Christchurch house prices are now on a par with Auckland at about six

times annual householder earnings. Some economists suggest that they

should be around three - that would be nice.

How do you see yourself ageing?

Close your eyes and think of yourself in 20/30/40 years from now.

What do you look like?

How are you walking?

Can you stand straight?

Are you pain free and able to go out and play with the grandchildren?

If not, why not!?

So if you don't like what you see—start working on

creating a new picture.

Good Luck with that new picture!

Career Corner

- What’s Hot!

• Endless reconciliations

• Late nights

• Exams

• CPD

• Dealing with auditors

• Broken systems

• No lunch break

• Sorting out all the mess

• Year end

• Inland Revenue on our backs

• Manual processes

• Working weekends

• Month ends

• Tax

• And more tax

Yeah Right!

BEANS R ON A D S

The Year End - 31 March 2012

There is a good chance that by the time you read this newsletter we will all be in a new financial year.

However, what the following date does signal (this is 31 March 2012) is the end of the last financial year, and

for many of you a pretty tough one at that.

There are challenges that exist for us all this year.

Our challenge this year for the Practice is to create an outstanding experience for

every one of our clients. An experience that will ensure that each and every one of

our clients will want to pay, stay and refer others. And, we’re ready!

Ready! And looking forward to working with you!

That’s your Accountant we’re talking about

March 2012




TOP FIVE REGRETS OF DYING

We thought this article was worthy of inclusion in our first newsletter of the year in case you missed it in The Christchurch

Press recently.

Its not that we want to start out with our first newsletter on a morbid topic, but we’re sure that many of you can associate

with some of those regrets as we become “buried” in our work.

So when you are close to kicking the bucket, what are you going to reflect on and what are you going to regret? According to

the recent publication it will be:

1. I wish I'd had the courage to live life true to myself, not the life others expected of me.

2. I wish I didn't work so hard.

3. I wish I'd had the courage to express my feelings.

4. I wish I had stayed in touch with my friends.

5. I wish I had let myself be happier.

You all know the old saying of the two certainties in life “death and taxes” well we’ve got the goods on both for you in this

newsletter

The Office Room Romp

Whether it is stealing a glance from behind the computers, flirting while

discussing the weather at the water-cooler or mulling around the

photocopier, it seems that New Zealanders white-collar workers are hot

under the collar.

Where did or do you go in the office to flap those

feathers?

Have you ever wondered when

you’re driving passed, when do

these guys get the actual road

works done?

Does it puzzle you too!?

What are you going to do this year to attract new business?

Perhaps of more importance is, what are you going to do to retain what you have?

What makes you interesting and different?

What makes you contribute to the community?

How can you make the lives of your customers/clients better?

How do you go about letting your customers know about what you can do for them if you want to avoid embarking on a

costly marketing and advertising plan? - It’s the internet.

Your website means you can now take the time to fully explain your products, write content, and articles to educate, tools,

calculators, games and competitions. A more interactive experience can be created with your customers.

A recent study of the American to American, Business to Business Market published in “Marketing Profits” found the three

largest generators of new business leads were:

Personal connections and referrals 41%

Company Websites 23%

and Email 14%

Not for a moment am I saying that you lose that personal touch, don’t you dare, but you need to be on the pitch before you

can play the game.

Family Support Entitlements/ 2012

There have been substantial changes to how your entitled family support is calculated, where the

calculation can extend well beyond just your personal taxable income.

Please go to our website if you would like to know more on the changes.

March 2012




Instalment Arrangements for Payment of Tax

Contact Inland Revenue Taxpayers are encouraged to contact the Inland Revenue or our office at the earliest opportunity if

they think that they may have trouble paying their tax in full by the due date, so that options for

payment, which may include an instalment arrangement, can be discussed. Early contact may also

minimise the imposition of late payment penalties as some penalties are not imposed when an

application seeking financial relief is being considered.

Instalment Arrangement

Section 177 allows a taxpayer to apply for financial relief by requesting to enter into an instalment arrangement. These

applications may be made by telephone, in writing, or by electronic means. The Inland Revenue will negotiate with the

taxpayer to determine what method of payment best suits the taxpayers financial circumstances.

However, section 177B provides that the Inland Revenue must not enter into an instalment arrangement with a taxpayer

(being a natural person), to the extent that the instalment arrangement would place that person in serious hardship.

“Serious hardship” is defined under section 177A and means significant financial difficulties that arise because of:

• The taxpayer’s inability to meet minimum living expenses according to normal community standards; or

• The cost of medical treatment for an illness or injury or the taxpayer or the taxpayers dependant(s); or

• A serious illness suffered by the taxpayer or the taxpayer’s dependant(s); or

• The cost of education for the taxpayer’s dependant(s).

L E T S

T A X

L

K

www.perriams.co.nz

Good advice is always on our website.

There are lots of great articles on our website

and information that can

assist you, not to mention

those famous end of year

checklists.

Make sure you visit

www.perriams.co.nz at

least once a month.

Annual Tax Rates

The annual tax rates for the 2012 income tax year are as follows:

Table

1 $0 - $14,000 10.5%

2 $14,001 - $48,000 17.5%

3 $48,001 - $70,000 30%

4 $70,001 upwards 33%

Row Range of dollar in taxable income Tax Rate

Member Tax Credits

For the MTC year ended 30 June 2012 and for

following MTC years:

• The maximum amount of MTC paid per

member is reduced to $521.43.

• The rate at which the member tax credit is

paid is reduced to 50c for each $1 contributed

by members.

• This means that in order to receive the

maximum MTC of $521.43, a member will

need to contribute $1,042.86 per year.

March 2012




ACHIEVERS CLUB

Come on all you “Achievers” we are sure that there

have been some sterling efforts put in by many of you

since the start of the school year.

There’s been lots of summer sports activities where we

know some of you will have excelled in.

We’ve got $25.00 vouchers just waiting here for you,

but you need to tell us what great things you have done.

Just go to our website www.perriams.co.nz and visit

our Achievers Club section.

If your children have been excelling or have done a

good thing of late then we want to acknowledge this

and make them feel special.

Tax Schemes and Aggressive Tax Planning On 2 November 2011, the Inland Revenue published a new page on

it’s website, “tax schemes and aggressive tax planning”, which sets

out the types of schemes that concern Inland Revenue, the risks in

investing in a scheme, and what an adviser can do if a client has

made a mistake. We summarise these for you as follows:

Income Shifting or Sheltering

Income is allocated or shifted to a taxpayer with the lowest tax

rate, or losses to use, and deductions and/or credits and allocated

to those in the highest tax brackets. An example of income

sheltering is where a non-resident sells credits to a resident

because the non-resident has no use for them.

Income Deferral

Income recognition is deferred or smoothed to a year with a lower

taxable income. In this way, income is kept under the highest tax

rates (this does not include the income equalization scheme).

Accelerating the use of losses or credits

There may be schemes that artificially bring forward a liability to

income tax that is offset against losses or credits. This is commonly

used when future shareholder changes may otherwise result in the

loss of a company’s tax benefit (such as tax losses or imputation

credits).

Creating or inflating expenses

Ben Nevis Forestry Ventures Ltd vs C of IR is the most well-known

example of creating expenses for tax purposes where there is

either no, or nominal economic cost. Similarly, some transactions

look to inflate the expenses associated with the scheme (to

increase the deduction or GST credit claimed).

Changing the character of receipts or outlays

This occurs where a taxpayer tries to change a transaction’s

characteristics so that income that would otherwise be liable for

tax is exempt or not within the tax rules, or expenses that would

not be ordinarily deductible are changed to something that is.

GST - Specific Avoidance

Instances include payments/invoice basis arbitrage, inflation

expenses while avoiding the output liability, attempted avoidance

of the associated persons rules, and avoiding GST consequences of

ending business or forced sales.

Misuse of Charities

Inland Revenue is concerned with certain structures

inappropriately using the tax exempt status of charities and will

continue to work closely with the Charities Commission to identify

charities which misuse their tax-exempt status.

Ministry Reveals $180 Million account error

Some of you will have caught this recent article in the papers. A $180 million accounting error at the

ministry of transport last year was not discovered for six months, and eventually led to the

resignation of one worker.

Apparently the error occurred when a figure was left out while data was being transferred between spreadsheets “the effect

of the error was that for a period of time the NZTA believed it had more money in the bank than it did” their Chief Executive

revealed. Do you always get that feeling, more money than you thought?

Every once in a while we might transpose a figure or miss something, but not often due to our diligent review process, but

$180 million! We don’t feel so bad now!

The Cellphone - Can’t you just turn it off for

a little bit?!

It’s a case of the Servant now becoming the Master. It

wasn't that long ago that only Doctors were on-call all

the time. Now it seems everybody is!

You have people now checking their Smartphone's

obsessively. Is there even an “on time’ and a “off

time”?

How distracting are they to the other things you have

at hand, or should be doing?

How is your continued awareness of your Smartphone

chime any good for anything?

It’s probably now an addiction for you, but just as junk

food may have been, if you’ve managed to cut back on

this, then your cellphone habits can too!

Give it a go and turn the damn thing off from

time to time.

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